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A Spatial Knowledge Economy

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  • Donald R. Davis
  • Jonathan I. Dingel

Abstract

Leading empiricists and theorists of cities have recently argued that the generation and exchange of ideas must play a more central role in the analysis of cities. This paper develops the first system of cities model with costly idea exchange as the agglomeration force. Our model replicates a broad set of established facts about the cross section of cities. It provides the first spatial equilibrium theory of why skill premia are higher in larger cities, how variation in these premia emerges from symmetric fundamentals, and why skilled workers have higher migration rates than unskilled workers when both are fully mobile.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 18188.

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Date of creation: Jun 2012
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Handle: RePEc:nbr:nberwo:18188

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References

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  1. Sylvie Charlot & Gilles Duranton, 2003. "Communication externalities in cities," LSE Research Online Documents on Economics 20016, London School of Economics and Political Science, LSE Library.
  2. Benjamin Moll & Robert E. Lucas, 2011. "Knowledge Growth and the Allocation of Time," 2011 Meeting Papers 1030, Society for Economic Dynamics.
  3. Marcus Berliant & Robert R Reed & Ping Wang, 2003. "Knowledge Exchange, Matching, and Agglomeration," Levine's Bibliography 666156000000000395, UCLA Department of Economics.
  4. Emi Nakamura & J?n Steinsson, 2014. "Fiscal Stimulus in a Monetary Union: Evidence from US Regions," American Economic Review, American Economic Association, vol. 104(3), pages 753-92, March.
  5. J. Vernon Henderson & Mohammad Arzaghi, 2005. "Networking Off Madison Avenue," Working Papers 05-15, Center for Economic Studies, U.S. Census Bureau.
  6. Borck, Rainald & Pflüger, Michael P. & Wrede, Matthias, 2007. "A Simple Theory of Industry Location and Residence Choice," IZA Discussion Papers 2862, Institute for the Study of Labor (IZA).
  7. Nathaniel Baum-Snow & Ronni Pavan, 2013. "Inequality and City Size," The Review of Economics and Statistics, MIT Press, vol. 95(5), pages 1535-1548, December.
  8. Marcus Berliant & Masahisa Fujita, 2005. "Knowledge Creation as a Square Dance on the Hilbert Cube," Game Theory and Information 0506006, EconWPA, revised 26 Sep 2005.
  9. Dan Black & Natalia Kolesnikova & Lowell Taylor, 2009. "Earnings Functions When Wages and Prices Vary by Location," Journal of Labor Economics, University of Chicago Press, vol. 27(1), pages 21-47, 01.
  10. Eeckhout, Jan & Pinheiro, Roberto & Schmidheiny, Kurt, 2010. "Spatial Sorting: Why New York, Los Angeles and Detroit attract the greatest minds as well as the unskilled," CEPR Discussion Papers 8151, C.E.P.R. Discussion Papers.
  11. Joseph Gyourko & Christopher Mayer & Todd Sinai, 2006. "Superstar Cities," NBER Working Papers 12355, National Bureau of Economic Research, Inc.
  12. Steve Gibbons & Henry G. Overman & Panu Pelkonen, 2010. "Wage Disparities in Britain: People or Place?," SERC Discussion Papers 0060, Spatial Economics Research Centre, LSE.
  13. Paul Beaudry & Mark Doms & Ethan Lewis, 2010. "Should the Personal Computer Be Considered a Technological Revolution? Evidence from U.S. Metropolitan Areas," Journal of Political Economy, University of Chicago Press, vol. 118(5), pages 988 - 1036.
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Cited by:
  1. Breinlich, Holger & Ottaviano, Gianmarco & Temple, Jonathan, 2013. "Regional Growth and Regional Decline," CEPR Discussion Papers 9568, C.E.P.R. Discussion Papers.
  2. Paul Beaudry & David A. Green & Benjamin M. Sand, 2013. "Spatial Equilibrium with Unemployment and Wage Bargaining: Theory and Estimation," NBER Working Papers 19118, National Bureau of Economic Research, Inc.
  3. Kohei Nagamachi, 2013. "Comparative Advantage and Skill Premium of Regions," Economics Bulletin, AccessEcon, vol. 33(3), pages 1681-1694.

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